Gujarat Toolroom stock surges 5%, hits upper circuit after as board to consider bonus issue on Jan 6

Shares of Gujarat Toolroom surged by 5 per cent, hitting the upper circuit limit after the company announced it would hold a board meeting to discuss a potential bonus share issue in the ratio of 5:1, on Wednesday's trading session.

Gujarat Toolroom is set to hold its board meeting on Monday, January 6, 2025, as per a filing with the exchange.

“We wish to inform you that a meeting of the Board of Directors of Gujarat Toolroom Limited is scheduled to be held on Monday, January 6, 2025, to consider and approve the proposal for issuance of bonus shares in the ratio of 5:1 (five bonus equity shares for every one equity share) to the eligible equity shareholders of the Company as on the proposed record date by capitalisation of securities premium, subject to the approval of the shareholders of the Company,” the company said in the filing.

According to data on the BSE, this will mark the company's first issuance of bonus shares to its shareholders.

Companies issue bonus shares to utilize their free reserves, boost their Earnings Per Share (EPS), and increase their paid-up capital, while also reducing the reserves. These shares are provided to shareholders at no extra cost and are commonly referred to as free shares.

Only investors who purchase the stock before the ex-date will be eligible for the bonus shares. Those buying on or after the ex-date will not qualify for the bonus shares.

The record date for the bonus issue has not been set yet.

Stock splits and QIPs

In the previous year, Gujarat Toolroom had split its shares from ₹10 to ₹1.

A stock split is typically implemented by a company to increase the number of its outstanding shares and enhance trading liquidity, making the stock more accessible to shareholders.

In October, Gujarat Toolroom successfully raised ₹50 crore through a Qualified Institutional Placement (QIP) at an issue price of ₹11.50 per share. The offering saw substantial involvement from institutional investors such as Zeta Global Funds and Eminence Global Fund PCC Trade Fund.

Gujarat Toolroom's shares are currently trading 5 per cent higher at ₹17.22.

Over the past month, Gujarat Toolroom shares have surged by almost 12.5 per cent, and by more than 28 per cent in the last three months, as per BSE analytics. Although the stock has experienced negative returns in the past year, it has skyrocketed by over 1200 per cent in the past three years.